UK Tax info on the web for CFD's ?

[gekkosluvchild]

Hello ,

I'm living overseas and it seems as i dont have to pay tax on CFD's being a non resident then they could be better than spread betting for medium to long term trades due to the cost of rollovers with SB. Any thoughts on whether you agree or not welcome.

Been on the Inland Revenue site , but like most of these state websites seems like a jumbled maze to find any info. I 'll phone them, but does anyone know of any info on the web about this ?

ie, if a go long on a CFD contract while i'm overseas and then go back to the UK to live am i liable for CGT on that position when i close it ?

How much profits can i make with CFD's before i need to pay tax ?

If i spend no longer than 90 days a year in the UK then theres no CGT on my CFD's?

Cheers.

 

[MORRIS2001]

CGT is liable at the point of crystalisation, which is likely to be an issue. Whether there is a taper is another matter.

CGT threshold is around £10k per annum, so usually CFDs make more sense than spreads until you are at that level in any regards.

There is going to be some issue in regards to how and where you open your account. EG, if you open in the UK using a UK address then in reality it is hard to see that you would not be tax liable. If opening via an offshore zone then you may face a different situation etc.

As for the 90 day rule, this is very complex and I would suggest getting pro advice from expat accountants as everything is changing and becoming more difficult.

 

[Pferd]

Where do you reside the other nine months of the years if you don't mind I ask?

As the post before rightly says, the best is to ask a professional tax advisor about it. But in my point of view, if you use a UK account with a UK address it is very clear to me that your main residence is in the UK. If you live somewhere else why don't open an account there? Probably because you want to avoid paying taxes there aswell.

Nowadays it is very difficult to avoid paying taxes if you are making less than a seven digit sum a year. The authorities exchange a lot of information with each other and the nature of the digital world makes very easy to locate where you are at any given time. If you make millions or dozens of millions then we are speaking about another matter. But for the "small" guy there is no way around it. You better pay taxes, of course trying always to pay as little as possible. Otherwise, the draconian confiscation fines they impose these days are more expensive that what you save paying taxes. Furthermore you probably need to pay a lawyer or a tax advisor to work for you during the tax inspection.

So to keep it simple due it correctly and sleep well at night is my advice.

 

[luckystrike23]

I agree its hard not to pay tax particularly these days with the UK going for all the tax havens - even Switzerland is starting to exchange information... In my experience the inland revenue will always try to push you to pay taxes in whatever situation.

but paying taxes is not necessarily a bad thing - as you can also offset future profits against losses...

this might prove useful: Claiming Losses Against Capital Gains Tax

 

[scose-no-doubt]

you are liable to UK CGT even if you're non resident as you're uk domiciled

they're writing it into legislature and the bill got royal assent about two weeks ago

 

[D70]

Hello ,

I'm living overseas and it seems as i dont have to pay tax on CFD's being a non resident then they could be better than spread betting for medium to long term trades due to the cost of rollovers with SB. Any thoughts on whether you agree or not welcome.

Been on the Inland Revenue site , but like most of these state websites seems like a jumbled maze to find any info. I 'll phone them, but does anyone know of any info on the web about this ?

ie, if a go long on a CFD contract while i'm overseas and then go back to the UK to live am i liable for CGT on that position when i close it ?

How much profits can i make with CFD's before i need to pay tax ?

If i spend no longer than 90 days a year in the UK then theres no CGT on my CFD's?

Cheers.

I'd make the profit first. Then worry about your tax.
Most likely, you'll make a loss and can use it to offset other taxes you pay.

 

[MORRIS2001]

I'd make the profit first. Then worry about your tax.
Most likely, you'll make a loss and can use it to offset other taxes you pay.

For a UK resident then this would be spot on, but for a UK citizen who is non res or non dom then there is potential for far greater downstream tax issues if a liability is created.

It's a real mess these days and even if you opt for spread betting, the tax law implicitely works for UK residents, so there is a risk of liability for non res or dom.

Tim.

 

[gekkosluvchild]

Cheers for the replies.

I opened my CFD/sb account whilst overseas, using my home address in the UK.

So in summary if i use CFD's overseas they wont be taxed on them unless i make 10k per annum profit.
So with that in mind its not an immediate concern.

But even with Spread Betting i COULD be required to pay tax if i live outside the UK ?

Thanks

 

[MORRIS2001]

The problem with offshore is that there is offshore and there is offshore.

It depends on your structure and only you and your accountant know this.

In short, if you own a UK property then you are still domiciled in most cases, so if you earn taxable money in the UK while being non resident there are still tax implications.

With CFDs you are obliged to report all activity on your UK tax return so there is an important question as to whether you currently file a UK return and if not, would doing so create an insue regards your income tax status.

The professional who has sorted out your non res situation is almost certainly the only person who can formally advise you on what your liability would/will be or if there are serious implications to your overseas income status as a result etc.

 

[gekkosluvchild]

I dont own or have a property in my name in the UK. Even if i did i fail to see how i could be taxed on spread betting simply because i'm out of the UK. That just doesnt make sense for something that is tax free.

ie, you are retired and living overseas with no property in the UK and spread betting.

 

[Pferd]

I dont own or have a property in my name in the UK. Even if i did i fail to see how i could be taxed on spread betting simply because i'm out of the UK. That just doesnt make sense for something that is tax free.

ie, you are retired and living overseas with no property in the UK and spread betting.

You would be surprised to hear the explanations the tax inspectors will give you to justify something like this. There are a number of "factors" they will consider, which could be as crazy as where your children go to school. And while they might be wrong, it is for you the job of explain it to a judge

As Morris rightly says, there is offshore and there is offshore.....If you are not certain well beyond doubt that you are doing something (tax related) right, the best is to pay and forget about it. Even if you pay a little bit, they will be happy.
Believe me, it is not worth the hassle to fight against them for small amounts. They have an army of lawyers and for you there will be only taxes, penalties, interests and legal/accounting costs.

Of course, with spread betting you also have to consider if this is your only and main income or if it is really "betting". If it is the first option, they will not be very friendly with their claim, and probably a judge will side with them.